Getting a meeting with a prospective licensee feels like a big win, and it is. You may have spent months, sometimes years, developing your technology, filing patents, building prototypes, researching the market, preparing presentations and trying to figure out which companies might actually be interested. Then one of those companies finally responds and says, “This looks interesting. Let’s talk.”
Most inventors walk into that meeting thinking their primary job is to explain why their technology is innovative. They want to talk about the patent, demonstrate the prototype and explain everything the invention can do. All of that can be important, but if the company agreed to meet with you, something about the opportunity has already caught its attention. The more important question now is whether the company can see a realistic business opportunity behind the intellectual property.
That’s where many licensing opportunities run into trouble.
Over the years, I’ve seen promising technologies get meetings with exactly the kinds of companies we wanted to reach. The meeting goes well. People ask good questions. There’s genuine interest and sometimes additional discussions. Then, somewhere along the way, things slow down or stop. The inventor naturally wonders what happened. Did they lose interest? Did they decide the technology wasn’t good enough? Did a competitor get there first?
Sometimes the explanation is much simpler. The company started looking beyond the invention and calculating everything it would have to do after saying yes. That changes the entire licensing conversation.
The Licensee Is Looking Beyond Your Technology
When you own the intellectual property, you naturally look at the opportunity from your side of the table. You know how the technology works, the problem it solves, how much time and money went into developing it and what makes it different. You may have patents, prototypes, testing, research or other evidence supporting it, and those things certainly matter.
But put yourself on the other side of the table for a moment. The prospective licensee isn’t simply asking whether your technology works or whether your patent has value. The company is trying to figure out what it would have to do to turn what you have today into something it can actually sell.
How much additional development is required? What will it cost? How long will it take? Will the product fit its existing manufacturing, customers, distribution and sales organization? Are there regulatory requirements? Will the market need to be educated? How much internal management time will be required? Most importantly, if the company takes all of that on, is the potential financial return worth the investment and risk?
That is why I frequently tell clients that companies license business opportunities, not simply patents. The patent may protect the opportunity, but the business opportunity is what ultimately has to justify the investment.
A Medical Device Licensing Experience That Brought This Into Focus
A good example comes from a medical-device licensing project we worked on involving a patented airway connector technology. I’ll keep the company anonymous here because the lesson is more important than the client’s name.
The technology addressed a legitimate problem in airway management. Existing oral and nasal airway devices are generally passive devices, and medical professionals sometimes need additional capability for oxygen delivery and carbon dioxide monitoring. The inventor developed adapters designed to provide those connections more effectively.
There were two possible approaches to commercialization. One was a retrofit connector that could work with existing airway products. The other was an integrated version in which the connector would eventually become part of a newly manufactured airway product.
From a licensing standpoint, the retrofit strategy was particularly interesting. Instead of asking hospitals or clinics to replace the products they were already using, the connector potentially offered a way to improve those products. That could lower resistance to adoption and give a prospective licensing partner a more practical way to enter the market before moving toward a fully integrated product.
This wasn’t simply an idea written on the back of a napkin. There was patented technology, a defined clinical problem, product concepts, technical information, presentations, marketing materials and an extensive licensing outreach campaign. We contacted companies throughout the medical-device industry and generated responses from prospective partners.
One opportunity progressed far enough that we prepared a draft option structure with a company interested in pursuing the technology in the UK and European markets. On the surface, that sounds like exactly where an inventor wants to be. You have intellectual property, a product concept and a prospective licensing partner interested enough to discuss a possible deal.
But this is where the case becomes useful for anyone trying to license an early-stage technology. The prospective partner wasn’t simply being asked to manufacture a finished product and start sending royalty checks. It would have to take responsibility for subsequent product development. The contemplated structure involved the prospective partner pursuing development funding and then potentially moving into a commercial license.
So the real licensing proposition wasn’t just the patented airway technology. It also included everything that still had to happen before that technology could become a commercial product.
What I Call the Remaining Commercialization Burden
This is one of the most important things I want an IP owner to understand before approaching a prospective licensee. Every licensing opportunity has what I think of as a remaining commercialization burden. It’s simply the distance between where your opportunity is today and where it needs to be before somebody can make money from it.
Depending on the technology, that distance might include additional product development, engineering, testing, regulatory work, manufacturing setup, packaging, software integration, clinical validation, customer education, distribution, inventory, marketing or working capital. In some cases, very little remains to be done. In others, the prospective licensee may be looking at a significant investment before the first commercial sale ever occurs.
The farther the licensee has to carry the opportunity, the more risk it is being asked to assume. That doesn’t mean an early-stage technology can’t be licensed. I’ve worked with licensing opportunities at many different stages of development, and companies will take on development risk when the potential opportunity justifies it. But the opportunity has to be presented honestly and strategically for the stage it is actually in.
The mistake is walking into the meeting thinking the company is evaluating only the brilliance of your invention when the people sitting across from you are really trying to determine the cost, time and risk of completing the commercialization process. Once you understand that, you begin preparing for licensing meetings very differently.
A Company Can Be Interested and Still Say No
This also explains something that frustrates many inventors and IP owners. A company can be genuinely interested in your technology and still decide not to move forward. Those two things aren’t contradictory.
Someone in technology or product development may like the invention. Business development may see possibilities. Marketing may recognize the customer problem. An executive may even agree that your solution is better than something currently available. That’s encouraging, but it doesn’t necessarily mean you have a licensing deal developing.
Once the company begins evaluating the opportunity internally, different people start looking at different pieces of it. Engineering wants to know what still has to be developed. Regulatory wants to understand the approval path. Manufacturing looks at how the product could be produced. Marketing considers the customer and competitive environment. Finance starts thinking about investment and return. Management has to decide where the opportunity fits among everything else competing for the company’s money, people and attention.
Your licensing opportunity may not even be competing primarily against another inventor’s technology. It could be competing against the company’s internal R&D program, an acquisition, a product-line extension or another project that already has a champion inside the organization.
That’s why hearing “they loved the product” doesn’t tell me enough about whether a licensing opportunity is likely to move forward. I want to know whether the business case can survive everything that happens after the initial enthusiasm.
Before the Meeting, Sit on Their Side of the Table
If you have a prospective licensee meeting coming up, I would spend less time adding another ten slides explaining your technology and more time looking at the opportunity from the company’s perspective. Start by asking yourself a very practical question: What exactly am I asking this company to take on?
You should understand where the technology stands today, what has already been validated, what remains to be completed and which parts of that work you expect the licensee to assume. You should also understand why you’re approaching this particular company instead of simply working your way through a list of companies in the industry.
Does the company already sell to the customers who would buy the product? Does your technology complement something in its existing portfolio? Can the company use manufacturing, sales or distribution capabilities it already has? Does your technology give it a competitive advantage, solve a customer problem, open another market or create an additional revenue opportunity?
Those questions are important because the strongest licensing opportunities often allow a licensee to leverage capabilities it already has. If the company can plug your technology into an existing business system, the economics may look very different from an opportunity that requires it to build an entirely new infrastructure.
That was part of the thinking behind the retrofit strategy in our airway-device project. Rather than assuming the market immediately needed an entirely new airway system, the technology potentially offered a way to improve products that were already being used. From a commercialization standpoint, that changes the proposition. You aren’t just presenting an invention anymore. You’re presenting a possible path into the market.
Listen to the Questions Behind the Questions
Another thing I’ve learned over the years is to pay close attention to what a prospective licensee’s questions are really telling you.
When the company asks about development status, it isn’t necessarily asking because someone is fascinated by your engineering process. The company may be trying to estimate how much additional money and time will be required. When it asks about patents, it may be trying to determine what competitive advantage it can protect. When it asks about the market, it wants to understand whether the potential revenue justifies the investment. And when it asks what you’re looking for in a licensing relationship, it may really be trying to determine what responsibilities you’re expecting it to assume.
This is why I don’t think a licensing presentation should simply be a longer version of your patent description or product brochure. A good licensing presentation helps the prospective partner understand the business opportunity. I want the company to see where the technology fits, why customers would care, what has already been accomplished, what remains to be done, what resources may be required and why taking on that work could make business sense for that particular company.
You won’t always have every answer. Early-stage opportunities naturally have unknowns. But there is an enormous difference between not knowing every answer and not realizing the questions need to be answered.
Sometimes More Outreach Isn’t the Answer
Here’s another lesson from licensing campaigns that I think is easy to overlook. When companies repeatedly express interest but don’t move forward, the natural reaction is usually to increase the outreach. Contact more companies, send more emails, make more presentations and expand the target list.
Sometimes that’s exactly what you should do. Licensing is a numbers business to a certain extent, and reaching the right companies takes persistence. But if you’re consistently getting initial interest and the conversations keep dying at roughly the same stage, I would stop and look at the licensing proposition before simply adding another hundred names to the target list.
The opportunity may be asking the licensee to absorb too much development risk. You may be approaching the wrong type of company. A field-of-use strategy might make the opportunity more manageable. An option or evaluation arrangement might allow a company to investigate the technology without immediately making a full licensing commitment. Another development milestone might need to be reached before the opportunity becomes commercially attractive. Or the technology might be better positioned as an improvement to an existing product instead of an entirely new product category.
Those are strategy issues, not outreach issues. More outreach doesn’t necessarily fix them.
The Meeting Isn’t the Goal
I understand why getting the meeting feels so important. Licensing outreach can be difficult, and getting the right person at the right company to pay attention to your opportunity is an accomplishment. But the meeting itself isn’t the objective. The objective is to create a business discussion that has a realistic path toward a licensing transaction.
That requires more than explaining what you invented. You need to understand what the company would actually be licensing, what it would have to do next, what risks it would assume, how the opportunity fits its business and why the potential reward could justify taking those risks.
When you start thinking that way, the conversation changes. You’re no longer simply asking, “Do you like my invention?” You’re asking whether this opportunity makes enough business sense for this particular company to invest the money, time and resources required to commercialize it. That’s a much tougher question, but it’s also the question that ultimately matters.
Before You Schedule the Next Licensing Meeting
If you have intellectual property and you’re beginning to approach prospective licensees—or you’re already getting interest but the conversations aren’t progressing—the problem may not be your technology. It may be the commercialization proposition surrounding it.
Before doing more outreach, take a hard look at what a prospective licensee would actually have to take on after saying yes. Understanding that remaining commercialization burden can change how you position the opportunity, which companies you target, what materials you use, what deal structure you propose and even when you should approach the market.
I’ve seen the difference that kind of preparation can make. Sometimes the most valuable thing you can do isn’t find another prospective licensee. It’s figure out why the opportunity isn’t yet making enough business sense to the licensees you’re already finding.
If you’re facing that question, schedule a 15-minute Licensing Strategy Call with Licensing Consulting Group. We can look at where your technology stands, what a prospective licensee is likely to see when it evaluates the opportunity and where the commercialization gaps may be before you invest more time and money in outreach.
And if you’d like to continue receiving practical licensing insights, real-world case studies and strategies for turning intellectual property into commercial opportunities, subscribe to the Licensing Consulting Group newsletter.
Rand Brenner is an IP professional whose passion is helping inventors, startups, and businesses use licensing to turn their IP into income-producing products, services, and technologies. His decades of experience run the gamut from medical devices to food technology to consumer products. He’s licensed some of the biggest Hollywood entertainment blockbusters, including the Batman Movies (1 and 2) and the number one kid’s action TV show, the Mighty Morphin Power Rangers. Rand speaks about licensing and is a featured speaker at investment conferences, trade shows, colleges, and startup events. His first book, Hidden Wealth: The Money-Making Power of Licensing, was released in 2019 and is available on Amazon.com. He’s also a published writer, and his articles have appeared in several prestigious trade magazines, including The Licensing Journal, Intellectual Property Magazine, and License India.
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